Revised School-Funding Plan Taking Shape in New Jersey

After months of bitter public protest, the New Jersey legislature
appeared last week to be ready to make major revisions in the
controversial school-finance-reform and tax-increase law it approved
last summer.

Even the supporters and beneficiaries of the Quality Education
Act--notably the 30 urban school districts slated for massive increases
in state aid--seemed resigned to changes.

"The winds would indicate that something is going to happen," said
Kirk Smith, a spokesman for the Newark schools. "Let's go ahead and get
started with it."

Since the QEA's passage last summer, Gov. James J. Florio's package
has been the center of a storm that has rocked New Jersey politics.

Last November, after U.S. Senator Bill Bradley narrowly escaped
re-election defeat, the Governor called for negotiations on the
$1.1-billion spending plan, in part to stanch the hemorrhaging of
support for the Democratic Party.

Democratic leaders have been working on two separate proposals aimed
at placating voters angered by the $2.8 billion in new and increased
taxes approved last June.

The first plan to emerge, co-sponsored by the Senate president, John
A. Lynch, and majority leader, Daniel J. Dalton, would earmark $395
million for property-tax relief. The funds would be obtained by capping
annual spending increases at 13.5 percent for the state's 30 poorest
urban districts and 8.5 percent for all other districts.

Proponents of the proposal say that it would still provide enough
for poor districts to satisfy the state supreme court, which ruled in
Abbott v. Burke that the state's school-finance system was unfair.

The plan was scheduled for a Senate vote this Thursday. But
observers predicted that the proposal, which is strongly opposed by the
Florio administration and the education community, would be
rejected.

Meanwhile, Speaker of the General Assembly Joseph V. Doria Jr. has
been working on an alternative proposal, which has the administration's
blessing and the education community's grudging assent.

Although Mr. Doria's staff refused to comment on the unfinished
proposal, educators and state officials expect that he will suggest
skimming off about $200 million from the QEA for property-tax relief.
That money probably would come from transition aid earmarked for 146
affluent districts, whose state support is scheduled to dry up by
1995-96.

While expressing resigned support for the Doria plan, urban
educators say both proposals would hurt their districts because both
would at least temporarily shift teacher pensions back to the state--a
change demanded by the powerful New Jersey Education Association.

Despite the pension provisions, the NJEA has come out strongly
against the Lynch-Dalton plan.

Senator Lynch's estimates indicate that his bill would hit urban
districts the hardest, cutting about $28.3 million from Newark's
projected school aid, $30.3 million from Paterson's, and $7.7 million
from Trenton's.

"It's a major threat," said Betty Kraemer, president of the NJEA
''It decimates the Quality Education Act and the whole purpose behind
it."

Marilyn Morheuser, the attorney who represented the plaintiffs in
Abbott v. Burke, said last week that she would take the state back to
court if Mr. Lynch's proposal becomes law. She also promised to
scrutinize any other proposal carefully to make sure it meets the court
mandate.

But opponents conceded that the legislature has to provide some
relief to calm anti-tax protests.

"The Democrats have to come up with something that leaves the money
[for the poorer districts] intact but comes up with some property-tax
relief," Ms. Kraemer said. "Taking it from transition aid would do
that."

Dyke Pollitt, an aide to Mr. Lynch, noted that the legislature made
two promises when it passed the QEA--to improve education and to
lighten the property-tax burden.

But because income-tax receipts have been lower than expected, the
state has been unable to reduce property-tax levels.

"They're very nervous they won't be able to deliver on their
promise," observed Peg Goertz, director of the Educational Testing
Service's education-policy-research division.

While lawmakers maneuver, officials of the state's 610 school
districts have been struggling to draft their budgets without knowing
how much state aid they will get. The figures were initially to be
released Dec. 15, but had not been issued as of last week.

Because of the continuing uncertainty, the legislature also voted
this month to push back regional school-board elections to April 30,
from April 2.

The anxiety and impatience these delays have caused may work to the
advantage of Senator Lynch, Mr. Pollitt said. School administrators
have already begun pushing for any action that will allow them to get
on with running their districts.

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